San Francisco

As befits a city that borders Silicon Valley, San Francisco earns high marks from the businesses operating in it for the strength of its digital transformation environment.

The barometer reading for the overall digital environment in the city is 7.71, which is the second highest of the 45 cities surveyed. Confidence is particularly high in terms of new technology development and the quality of digital talent available in the city. Nearly three-quarters (73%) of survey respondents, for example, deem its educational institutions as “generally” or “very” effective in preparing people with the right digital skills.

Although San Francisco is a magnet for talent and for venture financing, its businesses face constraints in these areas as they pursue their digital transformation efforts. Funding limitations are cited as the toughest challenge for firms’ digital development followed by talent and skills shortages. “There is a fierce, brutal competition for talent here,” says Zac Bookman, founder and CEO of Opengov, a start-up providing software to government agencies. “It is very hard to recruit because there is a shortage on the order of tens of thousands of highly skilled engineers.”

Like the entire Bay area, the city is awash with accelerators, incubators and formal and informal networks and communities that businesses tap for help with their digital initiatives. Respondents say that innovation labs and centres (32%) are the most useful local resource in this regard. The city itself recently launched an innovation lab called “Superpublic”, a collaborative effort involving government, universities and businesses to solve urban issues using data and technology.